Good day and welcome to
the Facet Biotech first quarter 2009 financial results conference call. Todays
call is being recorded. For opening remarks and introductions, I would now like
to turn the call over to Ms. Jean Suzuki, Corporate and Investor
Relations. Please go ahead.

Jean
Suzuki

Good afternoon and thank
you for joining us today.

Todays call will begin
with a strategic overview of the company and an update on our development
programs by Faheem Hasnain, president and chief executive officer, followed by
a discussion of our financial results and expectations by Andrew Guggenhime,
senior vice president and chief financial officer.

After the conclusion of
the prepared remarks, we will open the call for questions. To ensure that
everyone has an opportunity to address their questions, we request a limit of
one question and one follow-up per person.

Before we begin, let me
remind you that the information we will cover today contains forward-looking
statements regarding our financial performance, clinical milestones and other
matters, and our actual results may differ materially from those expressed or
implied in the forward-looking statements. Factors that may cause differences
between current expectations and actual results are described in our filings
with the Securities & Exchange Commission, copies of which may be
obtained at the investor section on our website at facetbiotech.com. The
forward-looking statements made in this presentation should be considered
accurate only as of the date of this presentation and, although we may elect to
update forward-looking statements from time to time in the future, we
specifically disclaim any duty or obligation to do so, even as new information
becomes available or other events occur in the future.

It is now my pleasure to
introduce Faheem Hasnain.

Faheem Hasnain

Thanks and good afternoon
everyone. The first quarter of 2009 for
Facet Biotech was our first full quarter as an independent company. In just a short period of time, with less
than five months under our belt as an independent company, I believe we have
made significant progress in a number of areas.
Facet is a new company with clear objectives and I am confident that the
company is on the right track to create value for our investors.

In connection with our
spin-off in December 2008, we conducted an extensive strategic review,
from which we determined the following key strategic, operating and financial
objectives for the company:

·Focus in oncology;

·Advance our existing four clinical-stage
pipeline programs;

·Strategically, and in a disciplined
fashion, expand our pipeline to mitigate risk and increase our chances for
success;

So, these five key points
comprise the framework for Facet Biotech from which we believe we can build the
greatest value for our investors. Now, let me take you through each of these
points in greater detail.

First,
in the context of our focus in oncology, despite the number of successful
oncology therapeutics that have been developed over the years, there still
remains a significant unmet medical need, which presents a great opportunity
for the development of new drugs that target unique biological pathways. Our
focus in oncology leverages the core internal expertise we have here at Facet,
particularly in oncology research and translational medicine. This expertise will
certainly help us to reduce the risk of our investments by ensuring that our
programs are based on insights from our understanding of the biology before we
decide to move them forward.

The development of
PDL192, our humanized monoclonal antibody targeting the TWEAK receptor, is a
good example. Our researchers discovered that the TWEAK receptor is both
highly present and may be functionally involved in various solid tumor types.
They designed PDL192 to target the TWEAK receptor, which, in both cell culture
and mouse models of human cancer, has been shown to exhibit compelling
anti-tumor cell activity. We have progressed the antibody into the clinic as a
phase 1 program in patients with advanced solid tumors.

Translational medicine,
which is the process of translating what is seen in preclinical studies into
rationally designed clinical trials, is an important component of the drug
development process. Our researchers have demonstrated exceptional capabilities
in this area, exemplified by the work they have conducted for elotuzumab, our
humanized monoclonal antibody targeting CS1, which we are exploring in multiple
myeloma. Studies on the mechanism of action of elotuzumab as well as in vitro and in vivo models
of disease have shown that the antibody appears to work synergistically with
standard of care agents for multiple myeloma, specifically bortezomib and
lenalidomide plus dexamethasone. Based on these study data, we designed and
developed our ongoing phase 1 combination trials, which have yielded promising
data to date.

In
addition to our internal expertise, we are leveraging external experts in the
oncology space through the formation of our scientific advisory board. In March, we convened a group of leading
oncologists with expertise in the translational aspects of drug development to
provide external guidance for our development programs. Through these
relationships, we are now working to develop academic collaborations to further
our scientific understanding of our drug candidates. The chairman of this advisory
board is Dr. David Parkinson, who is one of the leading figures in
oncology research and drug development as well as a member of our board of
directors. Dr. Parkinson has held positions at the National Cancer
Institute as well as within academia and industry, and is a current board
member of the American Association of Cancer Research and the FDA Science
Board.

Our second key objective
is to advance our existing pipeline programs. We have four programs in the
clinic, all of which are products of our own internal research efforts, and
three of which are in oncologic indications. Now, let me begin with our
oncology programs and then end with an update on daclizumab, our phase 2
candidate for multiple sclerosis.

Elotuzumab is a humanized
monoclonal antibody as I mentioned that targets CS1 on myeloma cells. We
currently have three phase 1 trials in multiple myeloma that are enrolling
patients: a trial evaluating elotuzumab
as a monotherapy and two studies testing the drug in combination with standard
of care treatments. Now, we presented
preliminary data for the two phase 1 combination trials of elotuzumab at the
International Myeloma Workshop in late February.

2

In an oral presentation
of the interim results from the combination trial with Velcade, encouraging
activity was seen in 11 evaluable patients, with objective responses, which are
defined as partial response using standard response criteria, seen in 55% of
patients. Two elotuzumab-related serious adverse events were reported, chest
pain and diarrhea, but both resolved within 24 hours within treatment.

The interim results from
the phase 1 trial of elotuzumab in combination with Revlimid and dexamethasone,
which was presented as a poster, showed that among the 6 evaluable patients
that we had at the time, 66% had objective responses, and no serious adverse
events and no unexpected safety concerns were reported.

To date, the safety and
response data from both trials have been encouraging. Clearly, we and our collaboration partner
Bristol-Myers Squibb are excited to see such promising data for this program
and we look forward to updating you on our progress later this year.

Our second oncology
candidate is PDL192, which as I mentioned is a humanized monoclonal antibody
that targets the TWEAK receptor, which stands for TNF-like weak inducer of
apoptosis, targets the TWEAK receptor that we are evaluating in a phase 1 trial
in patients with advanced solid tumors. The trial is enrolling patients and we
expect to provide a preliminary safety update later in the year. PDL192 has
shown significant preclinical results in models where you typically dont see
activity, including in certain mutant cell lines in which currently available
treatments appear to have little effect, and as such we are enthusiastic about
the antibodys potential.

We hold worldwide rights
to the PDL192 program and we are in the process of defining a development path
for this candidate. Our near-term objective is to continuing to the understanding
of the underlying science behind this antibody and its potential in the clinic.

Our third oncology
candidate, volociximab, is being developed in collaboration with Biogen Idec
and is currently being tested in a phase 2 trial in ovarian cancer and a phase
1 trial in non-small cell lung cancer.
We are awaiting additional efficacy and safety data from the lung cancer
trial as well as follow-up data from the ovarian trial to inform our next steps
in this program, after which of course we would provide an update on the
program.

Our most clinically
advanced program is daclizumab, which is currently in a phase 2 registrational
trial for multiple sclerosis. While this program is outside of our stated focus
in oncology, it is an asset that presents a significant value creation
opportunity.

Now, Facet previously
conducted and reported a successful phase 2 study  known as CHOICE  which was
daclizumab added to interferon therapy for MS. Our partner, Biogen Idec,
is now conducting an additional phase 2 trial  known as SELECT  which is
evaluating daclizumab as a monotherapy in patients with relapsing
MS. In March, we announced that regulatory agencies agreed to
consider an amended version of the SELECT trial as the first of two required
registrational trials. To appropriately power the SELECT trial, the study
protocol has been amended to increase the number of patients from approximately
300 to 600 and the primary endpoint has been changed to measure annualized
relapse rate, which is a standard measure of efficacy in registrational MS
trials. We have not yet determined the design and timing of the second
registrational trial, however, these decisions will be guided, in part, by the
prior results of the CHOICE trial and the successful completion of a futility
analysis for SELECT. We are very pleased with the agreement we reached
with regulatory agencies regarding a more efficient and accelerated development
path for daclizumab especially given the significant unmet medical need in MS
that still exists. We believe there is a substantial market opportunity for a
drug like daclizumab, which appears to have a profile relative to existing
drugs on the market today that is very favorable and based on the data to date,
an attractive efficacy and safety profile.

In parallel with our
ongoing clinical activities, post-hoc analysis of exploratory
pharmacological assays performed during the CHOICE trial have
furthered our understanding of the molecule in patients with MS. At the
American Academy of Neurology meeting in Seattle last month, our researchers
presented a poster demonstrating a significant and positive relationship
between exposure to daclizumab at both the high and low dose levels and
reductions in a specific subset of activated T cells that are suspected of
playing a role in MS. Now, we are continuing our research and expect to publish
additional findings at future medical congresses.

3

In addition to supporting
our ongoing pipeline programs, we are looking at ways also to add to our
pipeline, our third key objectivein a thoughtful and focused mannerwhich we
believe can generate additional value for the company. We are looking exclusively at oncology
programs, primarily in phase 1and products that have demonstrated clear
evidence of biological activity yet will benefit from the added resources and
capabilities that Facet could offer as a partner. We have reviewed a
significant number of opportunities but have found only a very few that actually
meet even our initial criteria. We are
being opportunistic in our approach and will only execute a transaction to the
extent it is consistent with our strategic and our financial objectives and
brings clear value to our existing oncology-focused pipeline.

Now let me share with you
an area that I havent focused on much before, which is our protein engineering
platform technologies. Our researchers have developed proprietary technologies
that can be used to generate proteins that overcome deficiencies of first and
future generation molecules. Now, we believe these technologies provide fast
and comprehensive solutions for protein optimization. By creating a
comprehensive mutational map, these technologies have the potential to
systematically shape the clinical performance of protein-based drugs by
improving half-life; binding affinity; potency; yields and manufacturing costs;
as well as lowering immunogenicity. We
have a terrific team focused exclusively on these technologies and, given the
significant opportunity and quite frankly the limited financial investment, the
returns and potential upside could be attractive.

The value creation
opportunity for us is in swiftly and systematically identifying improved
compositions of matter and developing partnerships with companies looking to
develop and protect improved protein therapeutics. There are potentially
attractive partnership opportunities that may arise related to these
technologies, and we certainly look forward to keeping you apprised as we move
forward.

Now, finally, underlying
all of the other objectives is our commitment to maintaining operating and
financial discipline. From a financial
standpoint, we expect that our run rate operating costs, excluding our
development programs, which will of course vary based on the underlying
activities, will continue to go down over the remainder of 2009. Our goal is to strike the right balance to
make sure we are being financially responsible without compromising what is needed
to ensure success for our R&D activities, which will drive the long-term
value of the company. Andrew will detail
these efforts shortly.

Before I turn the call
over to Andrew, I would like to take a moment to address a situation that
evolved in the last five weeks or so. In March, we announced that we received a
notice of intention from Roderick Wong to nominate five candidates for election
to our board of directors at our 2009 annual meeting. Last week, two of Dr. Wongs
nominees separately notified us in writing that they were each withdrawing
their consent to being named as nominees for the election to the board.

As you may have seen
yesterday, we announced with Dr. Wong that, based on productive
discussions, Dr. Wong has withdrawn his slate of director nominees and
will not present, recommend or move for the election of any of the nominees he
had submitted for election. Now, we are very pleased with this conclusion and
look forward to continuing our ongoing constructive dialogue with Dr. Wong
as well as all of our other stockholders.

I would also like to make
a brief comment about our board of directors. I have been very pleased with the
contributions they have made in the short time Facet has been an independent
company. Four of our five board members are new, with less than a year on the
board of PDL pre-spin-off and then Facet post-spin. We have a well-balanced
board composed of Brad Goodwin and Gary Lyons and myself, as well as our newest
members, Dr. David Parkinson and Kurt von Emster, all of whom have extensive
biotech industry experience and contribute significant capabilities. Now, as
our newest members, David Parkinson brings scientific and clinical expertise
and Kurt von Emster brings substantial financial acumen and an investor
mindset. And as we have noted before, we
continue to evaluate additional experienced, independent and qualified
individuals for appointment to our board to ensure that weve got an optimal
mix of diverse experiences and perspectives to best represent the interests of
all stockholders.

Andrew?

Andrew
Guggenhime

Great and thanks Faheem,
and good afternoon, everyone.

Ill start the financial
discussion with a brief review of our Q1 financial results, and then comment on
trends for 2009, the status of our leases, our financial expectations for this
year and milestone opportunities under our collaboration programs.

4

As Faheem noted, the
quarter ended March 31, 2009 was our first full quarter as an independent
company. Our financials for the first
quarter of 2008 are comprised of the results of PDLs former biotechnology
operations and include costs and expenses associated with the companys former
manufacturing facility up through the date of its sale in March 2008 as
well as employee-related costs that are significantly higher than our current
run rate as a result of the restructuring activities initiated in March 2008
and January 2009.

Total revenues for the
first quarter of 2009 increased to $9.6 million from $4.7 million in the prior
year comparable period. This increase
was primarily due to $5.2 million in revenue recognized under the companys
elotuzumab collaboration with BMS, which was executed in the third quarter of
2008, and the recognition of $1.7 million of royalties received from EKR on
sales of the pre-mixed bag formulations of Cardene®.

Total costs and expenses
for the first quarter of 2009 increased to $38.5 million from $17.4 million in
the prior year period. However, the 2008
first quarter total costs and expenses were net of a $49.7 million gain
recognized on the sale of the companys former manufacturing facility during
this period, which reduced total costs and expenses by this same amount. Excluding this gain, total costs and expenses
for the first quarter of 2009 decreased by $28.5 million, or 43 percent, from
the first quarter of 2008. This
significant decrease was attributable primarily to the restructuring activities
undertaken over the last 18 months and the sale of the manufacturing plant in March 2008.

Total costs and expenses
for both periods include restructuring charges  $4.2 million and $5.5 million
in the first quarter of 2009 and 2008, respectively. The decrease in charges
was primarily attributable to the reduced scope of the restructuring activities,
including fewer position eliminations in 2009 as compared to 2008.

Our net loss for the
first quarter of 2009 was $29.2 million, or $1.22 per share, compared to a net
loss of $13.2 million, or $0.55 per share, for the first quarter of 2008. It should be noted that the gain on the sale
of the plant in the first quarter of 2008 reduced the net loss for that period
by $2.08 per share. Excluding that gain,
the 2008 first quarter net loss would have been $2.63 per share.

Our cash, cash
equivalents, marketable securities and restricted cash totaled $383.4 million
at March 31, 2009, a decrease from $403.4 million at December 31,
2008, reflecting cash utilization of $20 million in the first quarter of
2009. Cash utilized in operating
activities in Q1 2009 also was $20 million.

Additional details
regarding the historical results are summarized in the press release and the
accompanying financial tables. In
addition, our 10-Q, which we expect to file shortly, will provide more detail
on these results and the period-over-period variances.

Were quite pleased with
our Q1 2009 financial results from both an income statement and cash flow
perspective. As Faheem mentioned,
maintaining financial discipline and improving the financial structure of the
business are core imperatives for Facet.
Our results for the most recent quarter reflect much of the impact of
the activities we have undertaken to lower our cost structure. This said, we expect our workforce-related
and infrastructure costs to continue to decline over the balance of the year as
the impact of these restructuring and cost management activities take full
effect. And while weve made progress in
this area since the spin-off in December, we continue to seek opportunities to
reduce our overall cost structure.

Before I discuss our
thoughts on the remainder of 2009, I did want to briefly touch on our facility
leases, our commitment under these leases and what were doing about it. As disclosed in our 2008 10-K filing, our
gross estimated lease obligations for the two buildings we occupy, which are
based on certain assumptions, total approximately $221 million over the
remaining life of the leases, which extend to 2021. Of note is that these total lease obligations
include not only the rent, but also the costs of other contractual obligations
under our leases, including property taxes, common area maintenance fees and
insurance.

As a result of these
lease-related commitments, our current annual total facility costs are at least
$10 million higher than such annual costs would be if were in a space more
reflective of our current organizational needs.

We have been conducting
an aggressive subleasing effort to reduce the lease obligation and to offset as
much of our excess costs as feasible as quickly as possible. The current market conditions, however,
continue to be challenging.

5

In addition to these
subleasing efforts, we have been evaluating the possibility of any other
alternatives that might lead to a reduction of this obligation.

While these efforts are
ongoing, we have continued to look for opportunities to reduce our controllable
facility-related costs. And to that end,
we have just completed the consolidation of all of our employees into the smaller
of the two buildings we lease. We expect
that this consolidation will translate to annual savings of approximately $1
million.

Based on our solid Q1
2009 financial performance and our expectations for the remainder of the year,
we now anticipate coming in for the full year at the low end of our previously
stated cash utilization guidance of $95 to $100 million. As I have previously noted, we continue to
seek additional opportunities to reduce our costs, and are continuing to work
to drive our cash utilization for the year even lower than the $95 million we
are currently guiding to. As a reminder,
this estimate includes approximately $10 million in workforce-related cash
costs discrete to 2009 and does not reflect the impact of any potential
in-licensing activities.

While our focus on cost
management is without question a key objective, as weve discussed before, its
important to also consider our collaboration programs and potential milestones
under these programs when evaluating our overall cash utilization as a
company. On this note, I did want to
highlight the nearest milestone opportunities for our daclizumab and elotuzumab
collaboration programs.

Under our collaboration
agreement with Biogen Idec for daclizumab, our next potential milestone would
be triggered upon the treatment of the first patient in a phase 3 trial, at
which time we would receive a $30 million payment from Biogen Idec.

In connection with the
elotuzumab program, which is being developed in collaboration with BMS, if we
initiate a phase 2 trial, we would receive a milestone payment of $15 million.

Based on our current
development plans, should each of these programs advance to the next phase of
development, it is possible that we would earn both of these milestones in the
first half of 2010.

As we have previously
disclosed, as part of our collaboration agreement with BMS, BMS also has an
opt-in right to one of our preclinical candidates, PDL241, which may yield a
$15 million milestone by the end of this year or early next year if BMS decides
to exercise its option.

Now Id like to turn the
call over to the operator for your questions. Operator, please begin.

Thanks. Question for, I guess for Andrew. Your $95
million to $100 million cash utilization, I assume that includes the plan of phase
3 for daclizumab this year? Or does it not include that?

Andrew Guggenhime

Good question, Jason. Ill take that. The current
guidance weve outlined is based on various assumptions weve made with respect
to our development programs, with respect particularly to the daclizumab
program. I would note based on our timing that the impact of that, if it were
to move forward, would be nominal in 2009.

Jason Zhang

Yes. So, in other words youlike you just said, the
initiation could be in the first half of 2010 which would result in $30 million
in cash infusion. But, of course, if you dont start a trial, then you wouldnt
get that cash. But youon the other hand you wouldnt have to spend the upfront
money for the initiation of the big phase 3 trials. I wonder what would be the
cost for initiating the big phase 3? The $30 million that you might be able to
receive from Biogen would be just about to offset what your costs would be?

6

Andrew Guggenhime

Jason, again, this is Andrew. I think on your first
point, yes, youre correct in terms of the relationship between the receipt of the
milestone and associated additional costs with advancing the program into a phase
3 on top of the expanded phase 2 SELECT program. We are not providing
additional guidance at this time in terms of the overall cost should the
program move forward. I think its fair to say based generally on phase 3
programs in the MS space that even our portion of an aggregate phase 3 study
would be in excess of the $30 million milestone payment.

Jason Zhang

Okay. And then a quick follow-up. Timing for the
futility analysis of daclizumab. Of course we have seen some data now from the phase
2, the previous SELECT trial as well progressing before you amended the trial.
Do you have any idea nowI guess the question for Faheem, are we getting closer
to finding out when that futility analysis will be done?

Faheem Hasnain

Jason, we havent disclosed with our partners, Biogen
Idec, exactly when that futility analysis will be conducted, but certainly some
time in the back half of the year.

Jason Zhang

Thanks. I will come back to the queue.

Andrew Guggenhime

I would add to that, Jason, that weve made the
comment certainly with respect to the milestone that we have the possibility of
achieving that in the first half of 2010. So, that should give you some idea of
the overall framework under which we and Biogen Idec are working.

Jason Zhang

Okay.

Operator

Your next question comes from the line of Robert
Chapman with Chapman Capital. Your line is open.

Robert Chapman

Gentlemen, could you give us your perspective on the
cash that was placed into Facet at the time of the spin-off as compared to the
future expenses and liabilities that were quite predictable given the structure
of the lease and the plans for expanding the pipeline per se? Is it fair to say
that as in investor of Facet that one should look at the cash as in some way or
form being pre-dedicated or pre-committed to future expenses and not really
reflective of free cash that will be available for any kind of distribution?

Andrew Guggenhime

This is Andrew. Ill take that question. In terms of
the deliberations of the Board with the management team in considering the capitalization
levels for Facet, I think it is fair to say that certainly both the assets and
liabilities that were being assigned to Facetand the biggest of those
liabilities clearly being the lease obligationwere part and parcel into
consideration with the determination of the overall capitalization level of
Facet. That level wasthe funding was to appropriately capitalize Facet in light
of those assets and liabilities to execute on its strategy going forward and
was not to capitalize at that level to presume an immediate distribution of a
portion of that down to the stockholders in the Company.

Robert Chapman

The reason I ask that, Ive seen an analysis that
seems relatively prudent or well thought through that essentially that when looking
at the essential market cap and the enterprise value of the Company that to
sort of reduce the market cap by the cash to evaluate the enterprise value is
misleading because the cash essentially has been earmarked as part of the
business plan, which as a new Company, the Company intends to implement. And
instead, the enterprise value of the Company can be simply thought of as if the
cash and liabilities were matched off. Does that sound reasonable to you?

7

Andrew Guggenhime

Yes. It does.

Robert Chapman

Okay. Thank you.

Andrew Guggenhime

Thank you.

Operator

(Operator Instructions) There are no further
questions. I would like to turn the call over to Faheem Hasnain for closing
remarks.

Faheem Hasnain

Thank you. So, in closing, during the five months that
Facet has been operating as an independent Company, weve made significant
progress on many fronts, narrowing our focus, tightening our finances,
progressing our clinical programs forward, and building our capabilities. Im
very proud of the accomplishments weve made in such a short period of time.
These accomplishments clearly would not have occurred without the great work of
our employees here at Facet and thanks to their continued efforts were moving
forward towards building a great oncology company. Now, we look forward to
meeting with many of you in the coming months at upcoming investor conferences
and medical meetings. With that, I thank you very much for listening in and
hope you have a great day.

Operator

This concludes your conference call for today. You may
now disconnect.